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Manhattan home prices drop
A report shows luxury apartments took hit in third quarter amid lower sales activity
October 4, 2005: 8:11 AM EDT
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NEW YORK (CNN/Money) - Homes in Gotham got a little more affordable in the third quarter...or rather, prices dropped, but they still remained in nosebleed territory for most people.

The price declines followed two consecutive record quarters in which real-estate prices saw gains of at least 10 percent.

In its third-quarter Manhattan Market Overview report released Tuesday, Prudential Douglas Elliman attributed the price declines to a number of factors, including a modest uptick in mortgage rates, concern over the economic impact of Hurricanes Katrina and Rita, and a spike in gas prices.

Luxury-home prices (condos and co-ops combined) were hit hardest, according to the report. The average sales price of a luxury home sank 26 percent, to $3.8 million, from $5.2 million in the second quarter. It also was 7 percent below the average price of $4.1 million from a year earlier.

The median price of luxury homes meaning the price above which half of all luxury home sold -- also dropped, falling to $3.1 million from $3.8 million in the second quarter. A year ago, the median price was $3.2 million.

Meanwhile, the average sales price for all types of Manhattan homes combined fell nearly 13 percent to $1.1 million from a record $1.3 million in the second quarter. Still, that was 10 percent higher than a year ago.

The median sales price also fell, by 3.2 percent to $750,000. But it was still 25 percent higher than the median price of $600,000 a year ago.

There were, however, price increases for smaller apartments. The average price for studios rose nearly 13 percent, to $428,831, while the average price for one-bedrooms rose nearly 10 percent to $687,744.

Drilling down, prices for condos and co-ops both fell. Most notable: the average price of a co-op fell below the $1 million threshold, which it crossed for the first time in the second quarter.

Sales activity overall declined. The number of units sold fell 8.4 percent, to 1,997, from 2,181 in the second quarter. And the average size of apartments sold fell 14 percent to 1,169 square feet. That's due in large part to the fact that there was an increase in sales activity for studios and 1-bedroom apartments, while demand declined for larger apartments.

Not everything was down in the third quarter, however. The average price per square foot rose 1.4 percent, to $984, compared with the second quarter and it was up 22.5 percent from the year-ago price.

Also higher was the amount of time it took to sell a property: 133 days versus 102 in the second quarter.

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